Investments

12 Months Ended

Dec. 31, 2021

The following table provides amortized cost, gross unrealized gains, gross unrealized losses and fair value for our fixed-maturity securities:


(Dollars in millions)	Amortized cost		Gross unrealized				Fair value
At December 31, 2021			gains		losses
Fixed-maturity securities:
Corporate	$	7,043	$	467	$	13	$	7,497
States, municipalities and political subdivisions	4,768		330		3		5,095
Commercial mortgage-backed	264		9		—		273
United States government	121		2		—		123
Foreign government	26		—		—		26
Government-sponsored enterprises	8		—		—		8

Total	$	12,230	$	808	$	16	$	13,022






At December 31, 2020
Fixed-maturity securities:
Corporate	$	6,281	$	621	$	7	$	6,895
States, municipalities and political subdivisions	4,604		395		2		4,997
Commercial mortgage-backed	271		15		1		285
United States government	115		5		—		120
Foreign government	29		—		—		29
Government-sponsored enterprises	12		—		—		12

Total	$	11,312	$	1,036	$	10	$	12,338

The net unrealized investment gains in our fixed-maturity portfolio at December 31, 2021, are primarily the result of the continued low interest rate environment that increased the fair value of our fixed-maturity portfolio. Our commercial mortgage-backed securities had an average rating of Aa2/AA and Aa1/AA at December 31, 2021 and 2020, respectively.

The table below provides fair values and unrealized losses by investment category and by the duration of the securities’ continuous unrealized loss positions:


(Dollars in millions)	Less than 12 months				12 months or more				Total
At December 31, 2021	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses
Fixed-maturity securities:
Corporate	$	861	$	13	$	15	$	—	$	876	$	13
States, municipalities and political subdivisions	105		2		2		1		107		3
Commercial mortgage-backed	10		—		11		—		21		—
United States government	48		—		—		—		48		—
Foreign government	16		—		—		—		16		—
Government-sponsored enterprises	7		—		—		—		7		—
Total	$	1,047	$	15	$	28	$	1	$	1,075	$	16





At December 31, 2020
Fixed-maturity securities:
Corporate	$	330	$	5	$	46	$	2	$	376	$	7
States, municipalities and political subdivisions	31		2		2		—		33		2
Commercial mortgage-backed	23		1		6		—		29		1
United States government	12		—		—		—		12		—
Foreign government	10		—		—		—		10		—
Government-sponsored enterprises	—		—		—		—		—		—
Total	$	406	$	8	$	54	$	2	$	460	$	10

Contractual maturity dates for fixed-maturity investments were:


(Dollars in millions)	Amortized cost		Fair value		% of fair value
At December 31, 2021
Maturity dates:
Due in one year or less	$	689	$	697	5.4	%
Due after one year through five years	3,675		3,871		29.7
Due after five years through ten years	3,404		3,678		28.2
Due after ten years	4,462		4,776		36.7
Total	$	12,230	$	13,022	100.0	%

Actual maturities may differ from contractual maturities when there is a right to call or prepay obligations with or without call or prepayment penalties.

At December 31, 2021 and 2020, the company had fixed-maturity investments with a fair value of $119 million and $121 million, respectively, on deposit with various states in compliance with regulatory requirements. In addition, cash and fixed-maturity investments deposited with third parties used as collateral to secure liabilities on behalf of insureds, cedants and other creditors had a fair value of $116 million and $98 million at December 31, 2021 and 2020, respectively. At December 31, 2021, the company had common equities with a fair value of $84 million held in Lloyd's trust accounts to provide a portion of the capital needed to support Cincinnati Global's operations.

In the normal course of investing activities, the company enters into investments in limited partnerships, including private equity, real estate investments and asset-backed securities issued by third-parties. The company’s maximum exposure to loss with respect to these investments is limited to the investment carrying values included in the company’s consolidated balance sheets and any unfunded commitments.

The following table provides investment income and investment gains and losses:


(Dollars in millions)	Years ended December 31,
	2021		2020		2019
Investment income:
Interest	$	477	$	455	$	446
Dividends	246		220		201
Other	5		8		12
Total	728		683		659
Less investment expenses	14		13		13
Total	$	714	$	670	$	646

Investment gains and losses, net:
Equity securities:
Investment gains and losses on securities sold, net	$	4	$	79	$	26
Unrealized gains and losses on securities still held, net	2,278		841		1,626



Subtotal	2,282		920		1,652
Fixed-maturity securities:
Gross realized gains	36		16		13
Gross realized losses	(5)		(3)		(3)
Write-down of impaired securities	(1)		(78)		(9)
Subtotal	30		(65)		1

Other	97		10		(3)
Total	$	2,409	$	865	$	1,650

The fair value of our equity portfolio was $11.315 billion and $8.856 billion at December 31, 2021 and 2020, respectively. At December 31, 2021 and 2020, Apple, Inc. (Nasdaq:AAPL), an equity holding, was our largest single investment holding with a fair value of $862 million and $644 million, which was 7.9% and 7.5% of our publicly traded common equities portfolio and 3.5% and 3.0% of the total investment portfolio, respectively.

During 2021, the allowance for credit losses on fixed-maturity securities, including changes in the amount during the period, was immaterial. There were five fixed-maturity securities that were written down to fair value, due to an intention to be sold, for holdings in the municipal sector. At December 31, 2021, 278 fixed-maturity investments with a total unrealized loss of $16 million were in an unrealized loss position. Of that total, no fixed-maturity investments had fair values below 70% of amortized cost.

During 2020, there were no fixed-maturity securities with an allowance for credit losses. There were 14 fixed-maturity securities that were written down to fair value, due to an intention to be sold, for holdings in the energy, real estate, consumer goods, municipal and technology & electronics sectors. At December 31, 2020, 128 fixed-maturity investments with a total unrealized loss of $10 million were in an unrealized loss position. Of that total, no fixed-maturity investments had fair values below 70% of amortized cost.

During 2019, we other-than-temporarily impaired three securities. At December 31, 2019, 38 fixed-maturity investments with a total unrealized loss of $3 million had been in an unrealized loss position for 12 months or more. Of that total, no fixed-maturity investments had fair values below 70% of amortized cost.